On July 4 – the 249th birthday of the United States – President Donald Trump signed a bill that likely likely shackles the country's status as China's leading global economic superpower.
As the nonpartisan energy think tank RMI said, the world is in a transition from the information age, where the United States will dominate the development of new software and information technology into the renewable age, in which case the development and deployment of electricity and renewable energy technologies will drive the development and deployment of the global economy.
This transition is dominated by rebellious cleaning technologies such as solar, wind, electric vehicles and batteries, and its prices have fallen rapidly, with an exponential growth rate.
Chinese manufacturers have invested heavily in these technologies. To help the U.S. economy compete better in the field of clean technology, the Democrats passed the Inflation Reduction Act or the IRA in August 2022. The law includes incentives to stimulate domestic manufacturing of these key clean energy technologies.
And it's working.
In the following two years, the United States experienced a boom in clean energy manufacturing. But the Republican new budget settlement is known as “a big beautiful bill bill” that makes these incentives timid and pulls carpets out of the nascent domestic clean energy industry.
On the birthday of the United States, President Donald Trump cannot give the Chinese economy a more generous gift.
Chinese manufacturers dominate the electric vehicle market
The United States has the world's second largest auto market, but EVs account for 10% of new car sales in the country. This can give our residents the wrong impression that electric cars are not popular.
In fact, more than one-fifth of the new passenger cars sold worldwide in 2024 are electric. Market research firm Bloombergnef predicts that this share will increase to a quarter of new cars this year. According to the International Energy Agency, this could increase to a quarter of every 10 points by 2030. In other words, the global automotive market is becoming more and more electric.
China is the world's largest domestic automobile market, and the new cars sold in the country today are electric vehicles. Chinese automakers dominate the global electric vehicle market, offering a wide variety of affordable premium cars. The cheapest model of the Seagull, the electric car giant Byd, costs less than $10,000, which significantly weakens American companies like Tesla.
Ford CEO Jim Farley recently described Chinese electric cars as “far more than I've seen in the West.” He added that if his company loses the electric car market to Chinese automakers, “we don't have a future Ford.”
Former President Joe Biden has put 100% tariffs on Chinese electric vehicles (Chinese electric vehicles) to protect domestic U.S. industries. And, U.S. demand for electric vehicles is expected to grow rapidly in the coming years due to the results of federal tax credits made in U.S. tailpipe pollution regulations.
But the Republican new budget law will end the former on September 30, and the Trump administration has ruined the latter.
As a result, the energy system modelers for Princeton and Bloomberg projects are only half as many U.S. residents will buy electric cars in the next five years. By 2030, only about 27% of new car sales are now electric, compared with 80% in China.
Chinese companies also win the solar market
The story of solar panels is similar. Solar energy is cheap, can be deployed quickly, and has little pollution during its operation. It accounts for about 70% of global power generation capacity in 2024, including nearly 60% of the United States.
According to the International Energy Agency, Chinese companies control 80% of the global solar panel manufacturing supply chain.
The IRA aims to strengthen the U.S. solar manufacturing industry with a clean electricity tax credit. But the U.S. will reduce clean energy by 40% over the next decade due to the rapid phase-out of these incentives by the Republican Budget Act. Companies like U.S. solar maker Talon PV have begun suspending or canceling U.S. projects in a bid to be abolished with the clean energy tax credit, as well as other uncertainties such as Trump's unpredictable tariffs.
According to a project, a clean energy manufacturing announcement from the Wellesley College team, planned investment in batteries, electric vehicles and solar manufacturing surged when the IRA became law. This was followed by a sharp decline in the threats related to clean energy incentives since last November’s elections.
Energy Innovation is Yale’s climate-connected content-sharing partner, and the abolished clean energy tax credit is expected to cost 760,000 jobs by 2030 and reduce the country’s GDP by nearly a trillion dollars.
Budget settlement gives China's other advantages
Large budgeting can have many other negative effects. As clean energy deployments will slow down as electricity demand rises rapidly and natural gas turbines face years of backlog, experts warn that it will create energy scarcity. U.S. companies may scramble to find enough supply to meet the growing demand for electricity, which will lead to higher electricity bills and put our AI developers at a disadvantage in their high-risk races with Chinese competitors.
Increased country's dependence on fossil fuels will also lead to more air pollution and morbid American residents, with at least 17 million people losing health coverage and more than 300 hospitals at risk of closure, the result of other provisions in the Republican new law.
Senate damage to climate is reduced by 25%
As harmful as the final law, it is almost a lot worse for the climate. The version originally passed by the house will effectively cover up the clean electricity tax credit immediately. It was so harmful that 13 House Republicans begged colleagues to resolve the bill they just voted for.
The Senate Finance Committee does indeed make some improvements, mitigating the requirement to clean electricity to get a tax credit and significantly extending its timeline for sources other than solar and wind.
Republican Senators Lisa Murkowski (Alaska), Joni Ernst (Iowa), Chuck Grasley (Iowa) and John Curtis (Utah) reportedly amended the bill, which adds a one-year runway to new solar and wind investments to start building new solar and qualify for the full clean electricity tax credit.
Princeton modelers estimate that the House version of the bill will add about 2.7 billion tons of climate pollution to the atmosphere compared to the status quo, while the average U.S. home energy bill will exceed $2,000 over the next decade. The last bill passed by the Senate and signed by Trump as the law is expected to increase 2.1 billion tons of climate pollution, while our households have lost less than $1,700 in higher energy bills over the next decade.
This is about 25% less expensive than the home version, both in pocket books and in climate.
But that's much worse than the current situation of policies and regulations in the Biden era, where accelerated deployment of cheap solar and wind is expected to reduce household energy bills by about $600 over the next decade.
In the new curriculum, the United States will exceed Paris promises in 2030, which will exceed 7 billion tons of climate pollution, according to an analysis by Carbon Ship.
Given that the bill passed the slightest margins in the Senate, any Republican senator could send the bill back to the Mapping Commission by simply voting. Senator Murkowski chose to vote after pulling out various concessions for her state and clean energy incentives, and then begged the house to further determine the bill she ensured to pass.
Everyone except Chinese manufacturers do not like bills
Due to the huge nature of a large budgeting method, it has something that almost everyone doesn’t like. In fact, polls have been finding that Americans oppose the bill with nearly one-to-one profits.
Whether it is high energy costs, domestic manufacturing, jobs and economic growth losses, surge in national debt, energy scarcity, drastic cuts in social safety nets, exacerbating income inequality, or an additional 2 billion tons of climate pollution, there may be only one group of love for large budget bills. As Robbie Orvis, senior director of modeling and analysis at Energy Innovation, put it:
“All in all, this bill is a gift to China and now we have to smile and see what is happening. We are providing them with the industry of the future, which makes the United States a very difficult place to invest and reduces our energy security.”
Repost our articles for free under the Creative Commons license, online or in print.
